What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-03-21 compared with 2021-03-02 · 84 added, 232 removed, 23 unchanged (93% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

We are a late-stage clinical biopharmaceutical

company focused on the discovery, development and commercialization of drugs for the treatment of cancer.

Our core objective is

to leverage our proprietary PDC delivery platform to develop PDCs that are designed to specifically target cancer cells and deliver

improved efficacy and better safety as a result of fewer off-target effects.

Our PDC platform possesses the potential for

the discovery and development of the next generation of cancer-targeting treatments, and we plan to develop PDCs both independently

and through research and development collaborations.

Our lead PDC therapeutic, CLR 131 is

a small-molecule PDC designed to provide targeted delivery of iodine-131 directly to cancer cells, while limiting exposure to

healthy cells.

We believe this profile differentiates CLR 131 from many traditional on-market treatments.

currently being evaluated in the multi cohort CLOVER-1 Phase 2 study in adult B-cell malignancies and the CLOVER-2 Phase

1 study for a variety of pediatric cancers.

Our product pipeline also includes one preclinical PDC chemotherapeutic program

(CLR 1900) and several partnered PDC assets.

The CLR 1900 Series is being targeted for solid tumors with a payload that

inhibits mitosis (cell division) a validated pathway for treating cancers.

We are a late-stage clinical biopharmaceutical company focused on the discovery, development and commercialization of drugs for the treatment of cancer.

Our core objective is to leverage our proprietary PDC delivery platform to develop PDCs that are designed to specifically target cancer cells and deliver improved efficacy and better safety as a result of fewer off-target effects.

Our PDC platform possesses the potential for the discovery and development of the next generation of cancer-targeting treatments, and we plan to develop PDCs both independently and through research and development collaborations.

Our lead PDC therapeutic, iopofosine, is a small-molecule PDC designed to provide targeted delivery of iodine-131 directly to cancer cells, while limiting exposure to healthy cells.

We believe this profile differentiates iopofosine from many traditional on-market treatments.

Iopofosine is currently being evaluated in the multi cohort CLOVER-1 Phase 2 study in adult B-cell malignancies and the CLOVER-2 Phase 1 study for a variety of pediatric cancers.

Our product pipeline also includes one preclinical PDC chemotherapeutic program (CLR 1900) and several partnered PDC assets.

The CLR 1900 Series is being targeted for solid tumors with a payload that inhibits mitosis (cell division), a validated pathway for treating cancers.

Results of Operations

and development expense.

Research and development expense consists of costs incurred in identifying, developing

and testing, and manufacturing product candidates, which primarily include cost of manufacturing materials, fees paid to contract

research organizations, fees paid to medical institutions for clinical studies, and costs to secure intellectual property.

our research and development expenses based on four categories as follows:

clinical projects, manufacturing and related, preclinical

projects, and general fixed and overhead costs that are not allocated to the functional project costs, including personnel costs,

facility costs, related overhead costs, and patent costs.

and administrative expense.

General and administrative expense consists primarily of

salaries and other related costs for personnel in executive, finance, and administrative functions.

Other costs include insurance,

costs for public company activities, investor relations, directors’ fees, and professional fees for legal and accounting

Research and development expense.

Research and development expense consists of costs incurred in identifying, developing, testing, and manufacturing product candidates, which primarily include the cost of manufacturing materials, fees paid to contract research organizations, fees paid to medical institutions for clinical studies, and costs to secure intellectual property.

We analyze our research and development expenses based on four categories as follows:

clinical projects, manufacturing and related, preclinical projects, and general fixed and overhead costs that are not allocated to the functional project costs, including personnel costs, facility costs, related overhead costs, and patent costs.

General and administrative expense.

General and administrative expense consists primarily of salaries and other related costs for personnel in executive, finance, and administrative functions.

Other costs include insurance, costs for public company activities, investor relations, directors’ fees, and professional fees for legal and accounting services.

Twelve Months Ended December 31, 2021 and 2020

and Development.

Research and development expense for the year ended December 31, 2020 was approximately $10,141,000

compared to approximately $8,996,000 for the year ended December 31, 2019.

The following table is a comparison summary

of research and development costs for the years ended December 31, 2020 and December 31, 2019:

Research and Development.

Research and development expense for the year ended December 31, 2021 was approximately $17,586,000, compared to approximately $10,141,000 for the year ended December 31, 2020.

The following table is a comparison summary of research and development costs for the years ended December 31, 2021 and December 31, 2020:

Clinical project costs

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General research and development costs

The overall increase in research and

development expense of approximately $1,145,000, or 13%, was primarily attributable to an increase in general research and

development costs of approximately $1,540,000 largely related to an increase in research and development personnel.

Manufacturing and related costs decreased by approximately $450,000 due to a reduction in materials production processes and

related costs.

The clinical and pre-clinical project costs were relatively consistent.

and Administrative.

General and administrative expense for the year ended December 31, 2020 was approximately $5,150,000

compared to approximately $5,183,000 in 2019.

The decrease of $18,000, or less than 1%, in general and administrative costs was

primarily related to a decrease of approximately $42,000 in personnel costs and an approximate $158,000 decrease related to public

company expenses.

These costs were offset by an increase in legal fees and business insurance of approximately $185,000.

on Revaluation of Derivative Warrants.

We recorded a gain on the revaluation of derivative warrants of approximately

$43,000 in 2019.

These amounts, which are non-cash in nature, represent the change in fair value (resulting primarily from changes

in our stock price, and reduced remaining time over which the warrants will remain outstanding), during the respective period,

of outstanding warrants which were classified as liabilities because they contain a certain type of cash settlement provision or

a “down-round” anti-dilution provision whereby the number of shares for which the warrants are exercisable and/or the

exercise price of the warrants is subject to change in the event of certain issuances of stock at prices below the then-effective

exercise prices of the warrants.

For the year ended December 31, 2020, there was no gain or loss on derivatives as they expired

on August 20, 2019.

income (expense), net .

Other income for the year ended December 31, 2020 was approximately $185,000 due a gain on extinguishment

of debt related to the forgiveness of our loan and accrued interest obtained under the Paycheck Protection Program (“PPP”).

PPP was established as part of the Coronavirus Aid, Relief and Economic Security Act which provides for loans to qualifying businesses

for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business.

The loans and accrued interest

are forgivable after 24 weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits,

rent and utilities, and maintains its payroll levels.

The amount of loan forgiveness will be reduced if the borrower terminates

employees or reduces salaries during the 24-week period.

Interest income, net, for the year ended December 31, 2020 was approximately

$11,000, as compared to approximately $43,000 for the year ended December 31, 2019.

The decrease is a result of decreased returns

on investments.

The overall increase in research and development expense of approximately $7,445,000, or 73%, was primarily a result of an increase in clinical project costs primarily related to our WM pivotal study of approximately $7,050,000 and general research and development cost of approximately $360,000.

Manufacturing and related costs remained relatively consistent.

General and Administrative.

General and administrative expense for the year ended December 31, 2021 was approximately $6,545,000, compared to approximately $5,150,000 in 2020.

The increase of $1,395,000, or 27%, in general and administrative costs was primarily a result of an increase in professional fees and insurance, personnel costs and stock-based compensation expense.

Other income (expense), net .

Interest income, net, for the year ended December 31, 2021 was approximately $2,000, as compared to approximately $11,000 for the year ended December 31, 2020.

The decrease is a result of decreased returns on investments.

Other income for the year ended December 31, 2021 was approximately $7,000.

Other income for the year ended December 31, 2020 was approximately $185,000 because of a gain on extinguishment of debt related to the forgiveness of our loan and accrued interest obtained under the Paycheck Protection Program (PPP).

The PPP was established as part of the Coronavirus Aid, Relief and Economic Security Act which provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business.

The loans and accrued interest are forgivable after 24 weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels.

The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the 24-week period.

Liquidity and Capital Resources

Year ended December 31, 2021 Compared to Year Ended December 31, 2020

As of December 31, 2020, we had cash, cash

equivalents and restricted cash of $57.2 million compared to $10.6 million at December 31, 2019.

The increase was largely attributable

to net cash received from financing activities of approximately $60.5 million, offset by cash used in operating activities of $13.9

million and cash used in investing activities of approximately $62,000.

Cash provided from financing activities

of approximately $60.5 million was due to the net proceeds we received from the sale of our common stock, preferred stock and pre-funded

On June 5, 2020, we issued and sold 14,601,628 shares of common stock, 2,789,700 pre-funded warrants exercisable for

one share of our common stock at an exercise price of $0.00001 per share and 8,695,664 Series H warrants to purchase 8,695,664

shares of common stock.

The public offering price of a share of common stock together with one-half of a Series H warrant to purchase

one share of common stock was $1.15.

The public offering price of a pre-funded warrant together with one-half of a Series H Warrant

The Series H warrants have an exercise price of $1.2075 per share and are exercisable for five years from the date

Gross offering proceeds were $20.0 million, with net proceeds of approximately $18.3 million after deducting placement

agent fees and related offering expenses.

On December 23, 2020, we entered into an underwriting agreement where we agreed

to sell 18,148,136 shares of common stock at a public offering price of $1.35 per share of common stock, prior to deducting underwriting

discounts and commissions and estimated offering expenses.

On December 23, 2020, in a separate concurrent private placement,

we entered into a Securities Purchase Agreement with certain purchasers named therein, pursuant to which we agreed to issue and

sell, 1,518.5180 shares of Series D convertible preferred stock (the “Preferred Shares”).

The Preferred Shares

are convertible into a number of shares of common stock equal to $13,500 divided by $1.35 (or 10,000 shares of common stock for

each share of Series D Preferred Stock converted) and were issued at a price of $13,500 per share of Series D Preferred

The net proceeds of the offerings, after deducting the underwriting discounts and commissions, placement agency fees and

estimated offering expenses payable by us were approximately $41.4 million.

Cash used in operating activities of approximately

$13.9 million was largely due to funding of our research and development programs and general and administrative expenses.

Cash used in investing activities of $62,000

was due to the purchase of computer hardware.

As of December 31, 2021, we had cash, cash equivalents and restricted cash of $35.7 million, compared to $57.2 million as af December 31, 2020.

This decrease was primarily a result of research and development expense and general and administrative expenses.

The cash used in operating activities during the twelve months ended December 31, 2021 was approximately $22,569,000.

Our cash requirements have historically been for our research and development activities, finance and administrative costs, capital expenditures and overall working capital.

We have experienced negative operating cash flows since inception and have funded our operations primarily from sales of common stock and other securities.

As of December 31, 2021, we had an accumulated deficit of approximately $150,898,000.

Liquidity Outlook

We have incurred losses since inception

in devoting substantially all of our efforts toward research and development and have an accumulated deficit of approximately $126.8

million at December 31, 2020.

During the year ended December 31, 2020, we generated a net loss of approximately $15.1 million,

and used approximately $13.9 million in cash from operations.

We expect that we will continue to generate operating losses for

the foreseeable future.

At December 31, 2020, our consolidated cash balance was approximately $57.2 million.

We believe our cash

balance at December 31, 2020, is adequate to fund our basic budgeted operations for at least 12 months from the filing of these

financial statements.

Our ability to execute our operating plan beyond that time depends on our ability to obtain additional funding

via the sale of equity and/or debt securities, a strategic transaction or otherwise.

We plan to actively pursue all available financing

alternatives;

We have incurred losses since inception in devoting substantially all of our efforts toward research and development.

During the year ended December 31, 2021, we generated a net loss of approximately $24.1 million, and used approximately $22.6 million in cash from operations.

We expect that we will continue to generate operating losses for the foreseeable future.

As of December 31, 2021, our consolidated cash balance was approximately $35.7 million.

We believe our cash balance as of December 31, 2021 is adequate to fund our basic budgeted operations for at least 12 months from the filing of these financial statements.

Our ability to execute our operating plan beyond that time depends on our ability to obtain additional funding via the sale of equity and/or debt securities, a strategic transaction or otherwise.

We plan to actively pursue all available financing alternatives;

however, there can be no assurance that we will obtain the necessary funding.

Other than the uncertainties regarding

our ability to obtain additional funding, there are currently no known trends, demands, commitments, events or uncertainties that

are likely to materially affect our liquidity.

To date we have raised capital aggregating approximately $267 million.

Other than the uncertainties regarding our ability to obtain additional funding and our ability to meet the continued listing standards of Nasdaq, there are currently no known trends, demands, commitments, events or uncertainties that are likely to materially affect our liquidity.

Critical Accounting Policies and Estimates

The preparation of financial statements

and related disclosures in conformity with accounting principles generally accepted in the U.S., or GAAP, requires management to

make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of

the financial statements, as well as the reported amounts of revenues and expenses during the periods presented.

Management bases

its estimates and judgments on historical experience, knowledge of current conditions and various other factors that are believed

to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of

assets and liabilities that are not readily apparent from other sources.

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the U.S., or GAAP, requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the periods presented.

Management bases its estimates and judgments on historical experience, knowledge of current conditions and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Actual results could differ from those estimates.

these estimates and assumptions periodically and reflect the effects of revisions in the period that they are determined to be

We believe that the following accounting

policies reflect our more significant judgments and estimates used in the preparation of our financial statements.

Liabilities .

We review these estimates and assumptions periodically and reflect the effects of revisions in the period that they are determined to be necessary.

We believe that the following accounting policies reflect our more significant judgments and estimates used in the preparation of our financial statements.

Accrued Liabilities .

As part of the process of preparing financial statements, we are required to estimate accrued liabilities.

This process involves identifying services that have been performed on our behalf, and estimating the level of service performed

and the associated cost incurred for such service as of each balance sheet date in our financial statements.

Examples of estimated

expenses for which we accrue include:

contract service fees such as amounts paid to clinical research organizations and investigators

in conjunction with clinical studies;

This process involves identifying services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for such service as of each balance sheet date in our financial statements.

Examples of estimated expenses for which we accrue include:

contract service fees, such as amounts paid to clinical research organizations and investigators in conjunction with clinical studies;

fees paid to vendors in conjunction with the manufacturing of clinical materials;

and professional

service fees, such as for lawyers and accountants.

In connection with such service fees, our estimates are most affected by our

understanding of the status and timing of services provided relative to the actual levels of services incurred by such service

and professional service fees, such as for lawyers and accountants.

In connection with such service fees, our estimates are most affected by our understanding of the status and timing of services provided relative to the actual levels of services incurred by such service providers.

The majority of our service providers invoice us monthly in arrears for services performed.

In the event that we do

not identify certain costs that have begun to be incurred, or we over- or underestimate the level of services performed or the

costs of such services, our reported expenses for such period would be too high or too low.

The date on which certain services

commence, the level of services performed on or before a given date and the cost of such services are often determined based on

subjective judgments.

In the event that we do not identify certain costs that have begun to be incurred, or we over or underestimate the level of services performed or the costs of such services, our reported expenses for such period would be too high or too low.

The date on which certain services commence, the level of services performed on or before a given date and the cost of such services are often determined based on subjective judgments.

We make these judgments based on the facts and circumstances known to us, in accordance with GAAP.

Long-Lived Assets.

Long-lived assets include property, equipment, and right-of-use assets.

We periodically evaluate long-lived

assets for potential impairment.

Whenever events or circumstances change, an assessment is made as to whether there has been

impairment to the value of long-lived assets by determining whether projected undiscounted cash flows generated by the

applicable asset exceed its net book value as of the assessment date.

There were no long-lived asset impairment charges

recorded during the years ended December 31, 2020 or 2019.

Asset and Lease Liability.

A lessee is also required to record a right-of-use asset and a lease liability for all leases

with a term of greater than twelve months regardless of classification.

Leases with a term of twelve months or less will be accounted

for similar to existing guidance for operating leases.

Compensation .

We account for stock-based compensation by measuring the cost of employee services received in exchange

for an award of equity instruments based on the grant-date fair value of the award, using the Black-Scholes option-pricing model.

The cost of non-performance-based awards is recognized over the period during which an employee is required to provide service

in exchange for the award, the requisite service period (usually the vesting period).

For stock options with performance-based

vesting provisions, recognition of compensation expense commences if and when the achievement of the performance criteria is deemed

probable and is recognized over the relevant performance period.

We account for transactions in which services are received from

non-employees in exchange for equity instruments based on the fair value of such services received or of the equity instruments

issued (using the Black-Scholes option-pricing model) whichever is more reliably measured.

The measurement of stock-based compensation

for non-employees is subject to periodic adjustments as the options vest, and the expense is recognized over the period during

which a non-employee is required to provide services for the award (usually the vesting period).

Accounting for equity instruments granted

or sold by us under accounting guidance requires fair-value estimates of the equity instrument granted or sold.

If our estimates

of the fair value of these equity instruments are too high or too low, our expenses may be over- or understated.

For equity instruments

granted or sold in exchange for the receipt of goods or services, we estimate the fair value of the equity instruments based on

consideration of factors that we deem to be relevant at that time.

Certain warrants to purchase common stock that do not meet the requirements for classification as equity,

in accordance with the Derivatives and Hedging Topic of the FASB ASC, had been classified as liabilities on our balance sheet.

In such instances, net-cash settlement is assumed for financial reporting purposes, even when the terms of the underlying contracts

do not provide for a net-cash settlement.

These warrants had been considered derivative instruments as the agreements allow cash

settlement in certain circumstances or contain either “down-round” provisions whereby the number of shares for which

the warrants are exercisable and/or the exercise price of the warrants is subject to change in the event of certain issuances of

stock at prices below the then-effective exercise price of the warrants.

The primary underlying risk exposure pertaining to the

warrants was the change in fair value of the underlying common stock.

Such financial instruments were initially recorded at fair

value, or relative fair value when issued with other instruments, with subsequent changes in fair value recorded as a component

of gain or loss on derivatives in each reporting period.

The fair value of outstanding derivative

warrants was estimated as of a reporting date.

Where an active market for the warrant exists, fair value is based on the market

Where no active market exists, the Company principally uses a modified option-pricing model together with assumptions that

consider, among other variables, the fair value of the underlying stock, risk-free interest rates, volatility, contractual term

of the warrants, projected future financings and dividend rates in estimating fair value for the warrants considered to be derivative

We estimate volatility based on an average of our historical volatility and volatility estimates of publicly held

drug development companies with similar market capitalizations.

If our estimates of the fair value of these derivative warrants

are too high or too low, our expenses may be over- or understated.

No derivative warrants existed on December 31, 2020 or December

value measurements.

We account for certain financial assets at fair value, defined as the price that would be received

to sell an asset or paid to transfer a liability (i.e., exit price) in the principal, most advantageous market for the asset or

liability in an orderly transaction between market participants on the measurement date.

As such, fair value is a market-based

measurement that is determined based on assumptions that a market participant would use in pricing an asset or liability.

In conjunction

with our financing in 2019 we allocated the common stock and warrants separately based on the respective estimated relative fair

In conjunction with our financing in June 2020, we allocated the common stock, warrants and pre-funded warrants separately

based on the respective estimated relative fair value.

In conjunction with our financing in December 2020, we allocated the common

stock and preferred stock separately based on the respective estimated relative fair value.

If management made different assumptions

or judgments, material differences in measurements of fair value could occur.

We periodically evaluate long-lived assets for potential impairment.

Whenever events or circumstances change, an assessment is made as to whether there has been impairment to the value of long-lived assets by determining whether projected undiscounted cash flows generated by the applicable asset exceed its net book value as of the assessment date.

There were no long-lived asset impairment charges recorded during the years ended December 31, 2021 or 2020.

Right-Of-Use Asset and Lease Liability.

A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than twelve months regardless of classification.

Leases with a term of twelve months or less will be accounted for similar to existing guidance for operating leases.

Stock-based Compensation .

We account for stock-based compensation by measuring the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award, using the Black-Scholes option-pricing model.

The cost of non-performance-based awards is recognized over the period during which an employee is required to provide service in exchange for the award, the requisite service period (usually the vesting period).

For stock options with performance-based vesting provisions, recognition of compensation expense commences if and when the achievement of the performance criteria is deemed probable and is recognized over the relevant performance period.

We account for transactions in which services are received from non-employees in exchange for equity instruments based on the fair value of such services received or of the equity instruments issued (using the Black-Scholes option-pricing model) whichever is more reliably measured.

The measurement of stock-based compensation for non-employees is subject to periodic adjustments as the options vest, and the expense is recognized over the period during which a non-employee is required to provide services for the award (usually the vesting period).

Accounting for equity instruments granted or sold by us under accounting guidance requires fair-value estimates of the equity instrument granted or sold.

If our estimates of the fair value of these equity instruments are too high or too low, our expenses may be over- or understated.

For equity instruments granted or sold in exchange for the receipt of goods or services, we estimate the fair value of the equity instruments based on consideration of factors that we deem to be relevant at that time.

Fair value measurements.

We account for certain financial assets at fair value, defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in the principal, most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

As such, fair value is a market-based measurement that is determined based on assumptions that a market participant would use in pricing an asset or liability.

In conjunction with our financing in June 2020, we allocated the common stock, warrants and pre-funded warrants separately based on the respective estimated relative fair value.

In conjunction with our financing in December 2020, we allocated the common stock and preferred stock separately based on the respective estimated relative fair value.

If management made different assumptions or judgments, material differences in measurements of fair value could occur.

Contingencies.

From time to time, we may become involved in legal disputes regarding our products in development, intellectual property rights,

stockholder claims or other matters.

From time to time, we may become involved in legal disputes regarding our products in development, intellectual property rights, stockholder claims or other matters.

We assess each matter to determine if a contingent liability should be recorded.

this assessment, we may consult, depending on the nature of the matter, with external legal counsel and technical experts.

on the information we obtain, combined with our judgment regarding all the facts and circumstances of each matter, we determine

whether it is probable that a contingent loss may be incurred and whether the amount of such loss can be reasonably estimated.

In making this assessment, we may consult, depending on the nature of the matter, with external legal counsel and technical experts.

Based on the information we obtain, combined with our judgment regarding all the facts and circumstances of each matter, we determine whether it is probable that a contingent loss may be incurred and whether the amount of such loss can be reasonably estimated.

Should a loss be probable and reasonably estimable, we record a loss.

In determining the amount of the loss, we consider advice

received from experts in the specific matter, current status of legal proceedings, if any, prior case history and other factors.

Should the judgments and estimates made by us be incorrect, we may need to record additional contingent losses that could materially

adversely impact the results of operations and financial conditions.

In determining the amount of the loss, we consider advice received from experts in the specific matter, current status of legal proceedings, if any, prior case history and other factors.

Should the judgments and estimates made by us be incorrect, we may need to record additional contingent losses that could materially adversely impact the results of operations and financial conditions.

Quantitative and Qualitative Disclosures About Market Risk.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis